Ken Sweet and Larry Neumeister, Associated Press
Published on Thursday, March 28, 2024 12:02 pmEDT
Last updated Thursday March 28, 2024 4:01 pmEDT
NEW YORK (AP) – Crypto entrepreneur Sam Bankman-Fried was sentenced Thursday to 25 years in prison for a massive fraud on hundreds of thousands of customers that unraveled with the collapse of FTX, once one of the most popular platforms in the world. for digital currency exchange. .
U.S. District Judge Lewis A. Kaplan gave a scathing analysis of Bankman-Fried and her crimes before announcing a sentence that was half of what prosecutors were asking for and less than a quarter of the 105 years recommended by prosecutors. probation from the court.
“There is absolutely no doubt that Mr. Bankman-Fried’s name is currently in quite a bit of mud around the world,” Kaplan said of the 32-year-old who once seemed to be on top of the cryptocurrency world before after his businesses collapsed in November 2022, leaving customers, investors and lenders short more than $11 billion, an amount the judge ordered him to lose.
He was convicted in November of fraud and conspiracy, a dramatic fall from a peak of success that included a Super Bowl ad and endorsements from celebrities such as quarterback Tom Brady, basketball star Stephen Curry and comedian Larry David.
Kaplan imposed the sentence in the same Manhattan court where, four months earlier, Bankman-Fried testified that he had intended to revolutionize the emerging cryptocurrency market with his innovative and altruistic ideas, not steal. The judge said Bankman-Fried repeatedly committed perjury when he lied from the witness stand.
Kaplan said the sentence reflected “that there is a risk that this man will be in a position to do something very bad in the future. And it is not a trivial risk at all.” He added that it was “for the purpose of incapacitating him to the extent that he can appropriately be done for a significant period of time.”
Kaplan said he would recommend the Federal Bureau of Prisons send Bankman-Fried to a medium-security prison near San Francisco because his notoriety, his association with great wealth, his autism and his social awkwardness would likely make him especially vulnerable to a high level. security facility.
Assistant U.S. Attorney Nicolas Roos had recommended a prison sentence of 40 to 50 years, saying it was the only way to ensure “the defendant doesn’t do it again.”
“The defendant victimized tens of thousands of people and businesses, across multiple continents, over a period of several years. He stole money from clients who trusted him with it; he lied to investors; sent false documents to lenders; injected millions of dollars in illegal donations into our political system; and bribed foreign officials. “Each of these crimes deserves a long sentence,” prosecutors said in a court filing.
Prosecutors said Bankman-Fried misappropriated billions of dollars to fuel his quest for influence and dominance in the new industry, and had illegally used money from FTX depositors to cover his expenses, which included purchasing properties. luxury in the Caribbean, bribes to Chinese officials and private companies. planes.
Kaplan agreed with prosecutors Thursday that Bankman-Fried should not receive leniency just because some investors and clients could recoup some of their losses. He noted that customers lost about $8 billion, investors lost $1.7 billion and lenders suffered a shortfall of $1.3 billion.
When given the opportunity to speak, Bankman-Fried stood up and apologized in a rambling statement, saying: “A lot of people feel really let down. And they were very disappointed. And I’m sorry for that. “I regret what happened at every stage.”
He added: “My useful life is probably over. “This ended a long time ago, before my arrest.”
Bankman-Fried, dressed in his khaki prison uniform and chained at the ankles, briefly appeared emotional as he spoke for about 20 minutes, expressing regret for “many mistakes” but placing some of the blame on others. His signature messy, bushy hair had returned from the cropped look he showed off at trial.
The judge later criticized those comments and said he “never expressed a word of remorse for the commission of terrible crimes.”
Defense attorney Marc Mukasey said his client had been misunderstood.
“Sam was not a ruthless financial serial killer who set out to hurt people every morning,” Mukasey said. “Sam Bankman-Fried doesn’t make decisions with malice in his heart. He makes decisions with mathematics in his head.”
Bankman-Fried’s lawyers, friends and family had pleaded for leniency, saying he was unlikely to reoffend. They also said that FTX investors have largely recovered their funds, a claim disputed by bankruptcy attorneys, FTX and its creditors.
“Mr. Bankman-Fried continues to live a life of deceit,” wrote John Ray, the FTX CEO who has been cleaning up the bankrupt company. “The ‘business’ he abandoned on November 11, 2022 was neither solvent nor safe.” ”.
Two weeks ago, Mukasey attacked a parole office recommendation of 105 years in prison, saying a sentence of that length would be “grotesque” and “barbaric.”
He urged the judge to sentence Bankman-Fried to five to six and a half years in prison, which Mukasey said was a fair reading of federal sentencing guidelines.
Bankman-Fried was worth billions of dollars in the role as co-founder and CEO of FTX, which at one time was the world’s second-largest cryptocurrency exchange.
FTX allowed investors to purchase dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin. With billions of dollars in cash from investors, Bankman-Fried took out a Super Bowl ad to promote his business and bought the naming rights to a stadium in Miami.
But the collapse of cryptocurrency prices in 2022 took its toll on FTX and ultimately caused its downfall. FTX’s hedge fund subsidiary, known as Alameda Research, had purchased billions of dollars in various cryptocurrency investments that lost considerable amounts of value in 2022. Bankman-Fried attempted to plug the holes in Alameda’s balance sheet with funds from FTX clients.
Three other people in Bankman-Fried’s inner circle pleaded guilty to related crimes and testified at her trial.
The biggest name among the three was Caroline Ellison, Bankman-Fried’s one-time girlfriend. Ellison described Bankman-Fried as a calculating individual who knew she was likely committing crimes when she directed the use of clients’ funds. Two other former friends of Bankman-Fried, Gary Wang and Nishad Singh, also testified that they felt Bankman-Fried had directed them to commit fraud.